Steve Ballmer: We're a Devices and Services Company 295
Nerval's Lobster writes "According to Microsoft CEO Steve Ballmer's latest shareholder letter (not exactly a gripping read), Microsoft sees itself as a 'devices and services company.' The subsequent 1,200-odd words hammer that point, mentioning software such as Office and Windows 8 largely in the context of tablets and other hardware — and while Ballmer acknowledges the 'vast ecosystem of partners' building a 'broad spectrum of Windows PCs, tablets and phones,' he leaves the door wide open to Microsoft building its own toys in-house. If one takes Ballmer's words at face value, it seems that Surface, the tablet Microsoft's building in-house and promoting as a 'flagship' Windows 8 device, isn't so much a lark but the harbinger of the company's future direction. Whether Microsoft's decision to build its own devices affects its long-term relationship with Dell, Hewlett-Packard and other manufacturing titans remains to be seen. Perhaps Ballmer can take some comfort from Apple, which profited enormously by pursuing the 'we build everything in-house' route. But it's indisputable that a devices-centric approach is new ground for Microsoft."
What the fuck (Score:5, Insightful)
Microsoft is a software development and licensing company.
At least that's where all the money comes from. The Devices and Services aspects are huge money losing hobbies they've started.
I hope this means the end is near.
Bumpy times ahead (Score:5, Insightful)
It's not going to be a smooth ride. Microsoft will have to keep an eye on software updates to existing products as it attempts to shift it's position
Other than Xbox MS is largely unproven on the devices front. Surface could be a winner like Xbox or it could be a complete disaster like the Kin.
Windows 8 OS will either be a success or annoy users completely. It seems there's little to no middle ground. If you're gonna have to learn a new OS why does it have to windows?.
They're probably gonna piss off some OEMs as well. In the short term if they're lucky, long term if they're not.
Ballmer's track record is not great. Ballmer completely missed the way things were going with mobile and search. Sure, MS now has competitive products and services (some yet to launched (Surface), some not finished (updates to Windows after it was RTM)), but its behind Google on search and mobile. MS never misses and opportunity to miss an opportunity.
Now we're supposed to believe that Ballmer knows devices and services as well? They're at least three years behind Apple and Google. If they had been on the ball they could have predicted trends and even set trends, they could have had huge profits like apple and market share like google. There's only one reason they haven't. Ballmer.
Even the board knows it, this years bonus for him was 9% less than last year. That's three years in the trot he hasn't made his maximum bonus. Some of that is due to the economy, some of it is because he's simply missed opportunities to create or expand markets.
Not selling to Apple Drones. (Score:0, Insightful)
Many PC users will not tolerate the astronomical prices of Apple hardware.
After the anti-trust suit, they resume (Score:5, Insightful)
Microsoft seemed to be heading in this direction, with Microsoft keyboards and mice on the shelves and rumors of a "Microsoft PC," when they were rudely interrupted by the anti-trust suit (which lore attributes to federal judges really detesting IE4).
Now they have resumed this path.
It might work for Apple; will it work for Microsoft? Possibly, especially if their model is licensing their OS and software as a precursor to hooking us up with smart homes and persistent, cloud-based data (or buzzwords of the day).
The signal here is that Microsoft may no longer see the OS as a huge moneymaker, as people shift away from PCs to tablets and the like, and they may also have doubts that people outside business will keep buying Office and other software. I'm skeptical on this; I don't think tablets will replace PCs or that people will stop buying software (usually for the support contracts).
One thing that history seems to make clear: the bigger a company is, the more likely it is that it will become unresponsive to market forces, and drop like Goliath with a head wound.
If you're going to copy Apple again, go all in (Score:4, Insightful)
Re:Uh oh (Score:4, Insightful)
Re:Nobody Panic (Score:3, Insightful)
Writing on the wall (Score:4, Insightful)
Unfortunately for Microsoft, their ability to expect to continue making money of software licensing in the future is constrained by other "devices and services" companies (notably, Apple who started as devices and has been ramping up services, and Google who went the other way around) at commoditizing software in the areas on which Microsoft relies, directly and indirectly, for its software licensing revenue. Even Ballmer can read the writing on the wall with Apple passing Microsoft in 2010 to be the biggest tech firm, and Google passing Microsoft this year in the #2 spot. Whether Microsoft can reinvent themselves successfully remains to be seen, but that their past business model may not be viable much longer is pretty evident.
I think the end of Microsoft-as-we've-come-to-know-it is quite near; whether the end of Microsoft as an independent major player in the tech industry is near is a different issue, though.
Re:What the fuck (Score:5, Insightful)
MS has lost it's ability to turn on a dime it appears.
To be fair, only when Microsoft sees itself hurtling towards a cliff does it gain the ability to turn on anything resembling a dime. Even then the results are usually half-assed, with just enough marketing, copying, company-purchasing, and sometimes outright BS to pull it off. See also the late 1990's and Windows TCP/IP stack, IE, et al.
Gates had one other advantage that Ballmer does not: Microsoft was a whole lot more streamlined in 1996 than it is today.
In analogy terms?
Microsoft of 1996 was like turning a commercial fishing vessel: you could see it took effort, but it could turn quickly enough if it had to.
Microsoft of 2012 is like six oil supertankers welded together side by side, with two of them welded on backwards.
Companies always mimic the wrong parts of Apple (Score:4, Insightful)
People buy Apple products, initially, because of the marketing and the fact that owning such a device elevates their social status. When they're waiting in line at a grocery store, they like the feeling of holding that lovely, shiny device in their hands, knowing others are looking at it, evnious. You absolutely don't get that feeling with a dumbphone, or even most other smartphones. Pretty much the only the phone that will trigger that feeling is a probably Galaxy S3.
The user experience only comes after that fact. It's what keeps customers; that's its only real purpose, business wise. Without both the ability to attract customers, and keep them, Apple products (or any products) won't be very successful.
That's all that there really is to it to Apple's success. They make people want a product, and then they make them want to keep it. Things like "Apple makes their own hardware, so we will too!" or "Apple is a walled garden, so we will be one too!" never work if you don't concentrate on those two things. Everything else is, at most, just a means to an end.
Not quite dead yet... (Score:5, Insightful)
I don't see Microsoft dying off quite yet. They still rake in an obscene amount of money from the enterprise half of the tech world, and that's where all the money is. After all, what's $50/seat for a consumer OS license when they're raking in $5,000 or more for each Enterprise-tagged SKU?
I can however see them losing the consumer side, and hard. That in turn will start creeping into the Enterprise side of things - first as a trickle (iPhones at work, anyone?) then as a flood.
It'll take about 10 years, but by then I think that unless Microsoft does something drastic and effective, they will be reduced to selling Exchange servers/services/licenses, and that's about it (unless GMail takes over even that...)
Re:What the fuck (Score:4, Insightful)
Let us know when you successfully run the largest software company on the planet.
successfully
Let us know when Ballmer does.
Re:What the fuck (Score:5, Insightful)
Yeah, I have to really wonder about Ballmer. I've never seen him where he wasn't at least somewhat off his rocker.
You keep wondering there, armchair quarterback. Let us know when you successfully run the largest software company on the planet.
that's the thing.. running it successfully doesn't seem to have been much of a chore - BUT everything he's gotten involved and has grown with dollar spending has lost ms money over the last 10 years. it would be easy to argue that had he done _nothing_ he could have ran it more successfully(nothing includes not firing windows kernel development team - and includes not hiring ui wizs to fuck things up - basically just leaving it on autopilot).
and even your witty reply includes "largest software company on the planet". but he's constantly trying to make it something else and burning billions and bridges in the process, this time a "devices and services" company which is a loss doing stupid business when you compare it to the business of selling sw which costs nothing to duplicate - devices and services have costs - and the turn arounds he has been in the helm for have been catastrophes excluding windows 7(windows8 still unproven, vista made a lot of money but could have brought in a lot more and made 7 unnecessary). zune was a catastrophe, kin was a catastrophe, xbox-franchise is a catastrophe financially, windows phone 7 has been a big fat turd(technically and financially - it's really sad when the wince was more successful in gathering manufacturer interest)... surface was a bomb(the original table, not the yet unproven tablet)..
(written on a MS keyboard. their hw has been pretty good - but not a good business for them.)
Re:What the fuck (Score:4, Insightful)
Xbox is to sell Windows boxes. Period. Microsoft marketed XBoxes to developers as "write once, run on Xbox and Windows". And to a large degree, if you can buy a game on Xbox, you can find the same title for Windows. Playstation, Wii, Sega, Gamecube etc all have no such crossover effect.
Xbox was to keep gaming on Windows, and not lose developers to other manufacturers.
Re:What the fuck (Score:4, Insightful)
Let us know when you successfully [sic] run the largest software company on the planet.
MS has lost mindshare, marketshare, and profits under Ballmer. What has it gained? Zune, PlaysForSure, Courrier, Kin, Windows Phone 7, Bing, aQuantive, Surface tablets - a string of might-have-been products hamstrung by weak execution and weaker leadership. The stock price eloquently expresses what the market thinks of Ballmer's performance:
http://www.zdnet.com/blog/btl/chart-microsofts-performance-under-gates-vs-ballmer/35415 [zdnet.com]
In June this year they announced their first quarterly loss:
http://www.bbc.co.uk/news/business-18917906 [bbc.co.uk]
I don't think you can say that Ballmer has run Microsoft successfully in any way, unless you feel he has successfully squandered the legacy of Bill Gates.
Not quite so illogical. (Score:5, Insightful)
Not everything they choose to do is successful so suddenly they're not a successful company? What kind of logic is that?
My reading of this thread suggests that the GP's logic is more that Ballmer has zeroed in on an area where Microsoft has made considerably less money, and has lost considerably more money, than in the company's core business of software.
From the things I've read as a casual follower of MS's progress, the Zune lost a ton of money, Windows Phone hasn't done all that well (the Kin vanished after months of hype, for instance), and I don't think the XBox has broken even when viewed over the whole history of the console rather than just in any one fiscal year.
Meanwhile, the Windows OS and Microsoft Office software businesses have been moneymakers for decades now.
So the logic appears to be not that "some of Microsoft's operations aren't successful, ergo the company as a whole is unsuccessful" -- instead, it's that "Microsoft is focusing more and more on its lossmaking operations, ergo the company as a whole will be increasingly unsuccessful."
Considering that this move directly threatens partners such as HP and Dell, we could wind up seeing more support from such companies for Linux as they seek to hedge their bets against Microsoft's incursion into the hardware market. I think the software and computer industry could be on the verge of becoming much more interesting.
Cheers,